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Bill would limit employer wage clawbacks for payroll overpayments; unions cite Workday errors, businesses urge caution
Summary
Senate Bill 968 would permit employers to recover erroneous overpayments but cap deductions and limit look-back to 90 days; unions and state workers described large retroactive demands tied to Workday errors, while business groups said the 90‑day limit and notice/acknowledgment rules raise legal and operational questions.
Senate Bill 968 drew lengthy testimony Thursday as the committee considered whether to set limits on employer deductions to recover erroneous wage overpayments.
The dash-1 amendment presented to the committee provides a process allowing employers to recover overpayments while restricting repayment collections to wages overpaid within a 90-day look-back period and limiting automatic payroll deductions to 5% of an employee's pay in a pay period unless the employee agrees otherwise.
Chris Carpenter, counsel for the Oregon Federation of Nurses and Health Professionals, said the amendment establishes reasonable sideboards around when employers may deduct wages for overpayments and does not prevent employers from pursuing other legal remedies. “This just simply says that they will not be able to deduct those wages past that of if it's beyond 90 days,” Carpenter said.
Union and worker testimony described individual cases where payroll changes created large retroactive overpayment claims. Hannah Winchester recounted members who were later told they owed tens of thousands of dollars after audit adjustments, and Patricia Larios and Crystal Rodriguez, state employees, described audits and demand notices tied to the state’s Workday payroll implementation. Rodriguez said she was presented with a $14,764.98 debt after submitting her resignation and said the deduction demands violated her collective-bargaining agreement’s limits on recoveries.
Labor witnesses and union representatives argued the bill would protect workers from sudden, large payroll recoveries that can cause financial harm. “By protecting the amount of required pay deduction at 5% unless the employee elects otherwise, we can ensure that no Oregonian experiences undue financial hardship due to a paycheck error that was no fault of their own,” Winchester said.
Business groups, including Oregon Business and Industry and the Northwest Grocery Retail Association, said employers should have a path to recover bona fide overpayments and warned that the proposed notice-and-acknowledgment language could block recovery if an employee declines to acknowledge notice. OBI said the state’s public-employer agreement that used a similar approach followed extensive negotiation and that private employers may not have the payroll staff and resources to comply in the same way.
Committee discussion: Senators asked about the origins of the 90-day look-back and the 5% deduction cap; proponents pointed to Washington state's analogous rule and experience and characterized 90 days as achievable and protective for workers. Several committee members urged continued negotiations to address technical concerns raised by business groups.
Ending: The committee closed the public hearing; no vote was taken. Sponsors and opposing groups said talks would continue on notice mechanics, the employee-acknowledgment requirement and administrative details before the measure returns to the committee.
